| Wednesday 05 January 2022 Good morning Voornaam,
New year. New you. Same market? Only time will tell.
I picked up a Bloomberg story the other day which noted that the S&P 500 (the US benchmark index) has doubled in the past three years. That's a phenomenal outcome for those who had exposure to the US index, capped off by a return of well over 28% in 2021. The tech-heavy Nasdaq-100 has also been on a charge, gaining over 21% in 2021. The questions on everyone's lips relate to the risk of inflation, the potential reduction in stimulus by the Fed and whether the underlying earnings in US companies will be strong enough to keep supporting share price gains regardless of those factors.
Locally, the JSE All Share Total Return Index returned more than 29% in 2021 for investors willing to bet on the local market. That's a better percentage return than the S&P500, but be careful because (1) this JSE index includes dividends and (2) you need to factor in depreciation of the ZAR against the USD to get the full picture. As always, looking at past returns can be dangerous as a tool to predict the future. That same JSE index is only up around 70% over 5 years, a compound annual growth rate of around 11%.
What we do know is that shares have outperformed other asset classes over the long term, which means you are doing the right thing by reading InceConnect every morning, listening to Magic Markets podcasts weekly and reading Ghost Mail every Tuesday. All of us are on a journey of discovery and learning. It's a journey I look forward to sharing with you in 2022!
One of the big newsmakers in the quiet period was Steinhoff. I've written on that story here and I'm loving the growth in my shares. Notably, Pieter Erasmus has been appointed as a non-executive director on the board of Pepkor, having been the Pepkor CEO from 2001 to 2017. Read the article to see why that is linked to the Steinhoff dispute.
Today's other feature article is on another company that has traditionally been associated with Dr. Christo Wiese. Invicta is on the acquisition trail, this time for a diesel parts supplier in the UK and US. Read about that deal here.
Back in May 2021, Sanlam announced an intention to increase its shareholding in SAHAM Assurance Maroc to 84.5% by acquiring a further 22.8% in the company for nearly R2 billion. Santam is co-invested with Sanlam in this entity. The financial services groups have now confirmed that the conditions precedent were not fulfilled and the deal will not go ahead.
Trustco holds 65% of Meya Mining, a diamond operation in Sierra Leone. A global diamond producer has offered USD150 million as a debt facility to scale the operations, but it comes with the ability to acquire a 55% stake at a nominal price. In other words, it's just a convertible debt instrument. A deal has not yet been finalised.
In related news, Trustco needs to get its annual report delivered to the JSE, as it has missed the four-month timefr ame stipulated by the JSE. Other companies in the naughty corner are Labat and Rebosis. All three must submit by 31 January or face possible suspension.
EPP shareholders should note that the voting limitation deed with Redefine has been amended for purposes of the Redefine - EPP deal. This is too specific a matter to warrant full attention here, but please do refer to the SENS announcement by EPP that was released on Monday if you have an interest in that deal.
Sticking with property, NEPI Rockcastle has appointed the current COO and deputy CFO as interim replacements for the CEO and CFO who are both leaving the company at the same time. Regardless of the reasons, the two most important execs leaving will never send a great signal to the market, even when it was announced well ahead of time.
Anglo American is in discussions with Vale to potentially jointly develop Val e's Serpentina iron ore resource in Brazil. Nothing is confirmed at this stage and the discussions are very early in nature.
Finally, the last Magic Markets episode of 2021 was a look back at the winners and losers in our portfolio. We don't hide our mistakes; we highlight them in an effort to learn! Make sure you listen to the episode here.
That's it for the first edition of 2022. Let's get this year started!
The Finance Ghost
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